Provisional Legislative Council

PLC Paper No. CB(1) 1368
(These minutes have been seen
by the Administration)

Ref : CB1/PL/HG/1

Panel on Housing
Minutes of meeting held on Thursday, 12 March 1998, at 8:30 am in the Chamber of the Legislative Council Building

Members present :

Hon CHAN Yuen-han (Chairman)
Hon Frederick FUNG Kin-kee (Deputy Chairman)
Hon WONG Siu-yee
Hon Edward HO Sing-tin, JP
Hon Mrs Selina CHOW, JP
Hon LEUNG Chun-ying, JP
Hon CHAN Choi-hi
Hon CHAN Kam-lam
Hon Kennedy WONG Ying-ho
Hon TAM Yiu-chung, JP

Members absent :

Hon David CHU Yu-lin
Hon HO Sai-chu, JP
Hon Ronald ARCULLI, JP
Hon CHEUNG Hon-chung
Hon HUI Yin-fat, JP
Hon CHENG Kai-nam
Hon Andrew WONG Wang-fat, JP
Dr Hon Charles YEUNG Chun-kam
Hon Bruce LIU Sing-lee
Hon LAU Kong-wah
Hon CHOY Kan-pui, JP
Dr Hon TANG Siu-tong, JP
Hon Timothy FOK Tsun-ting

Public officers attending :

For item IV

Housing Bureau

Mr Andrew Wells,
Deputy Secretary for Housing (2)

Housing Department

Deputy Director (Works)

For item V

Housing Bureau

Mr David LO,
Assistant Secretary (Special Duty)2

Buildings Department

Mr H K NG, JP,
Assistant Director/Structural Engineering

Chief Structural Engineer

Housing Department

Mr WONG Chi-ching,
Senior Housing Manager (Agency)

Mr Steve LUK,
Atg Senior Maintenance Surveyor (South 5)

Territory Development Department

Mr D J Climas,
Deputy Project Manager/NT East

Mr Patrick H K CHAN,
Atg Chief Engineer/Tseung Kwan O

Attendance by invitation :

For item IV

Hong Kong Youth Concern Group on Housing Policy

Mr WONG Lee-man,

Mr CHEUNG Chor-wan,
Vice Chairperson

Mr Bill LAY, Convenor

The Action Committee on the Rights of Prospective Owners of Home Ownership Scheme Flats
Mr HUI Kam-shing
Mr YAU Cheong-hin
Miss TAI Ngan-yung
Mr OR Kit-wai

The Concern Group on the Rights of Prospective Owners of Home Ownership Scheme Flats
Mr CHOI Yat-ka
Mr LAU Bing-wah
Ms NG Sau-lin
Ms LEE Siu-ling

Kwai Chung Residents Association
Ms AU YEUNG Bo-chun
Mr LUI Hawk-nun
Mr MOK Sam
Ms CHEUNG Yuk-mui

Clerk in attendance :

Ms LEUNG Siu-kum,
Chief Assistant Secretary (1)2

Staff in attendance :

Miss Becky YU,
Senior Assistant Secretary (1)3

I Confirmation of minutes of previous meetings
(PLC Paper Nos. CB(1) 982 and 1075)

The minutes of the meetings held on 15 December 1997 and 19 January 1998 were confirmed.

II Date of next meeting and items for discussion

2. The next meeting would be held on Tuesday, 26 March 1998, at 2:30 pm to discuss the subjects on "Mortgage problem of Sandwich Class Housing Scheme flats", "Housing provisions for elderly persons" and "Recommendations for improvement to prevent re-occurrence of the incident of fallen glass panel in Ping Tin Shopping Centre".

3. A special meeting had been scheduled for Monday, 30 March 1998, at 10:45 am to discuss "New management model for Tenants Purchase Scheme estates".

(Post-meeting note: Two additional items on "Overcrowding relief in public rental housing estates" and "Construction quality and structural safety of buildings under subsidized home ownership schemes and the responsibility of Housing Authority" were subsequently included in the agenda for the meeting.)

III Information paper issued since last meeting

4. Members took note of the information paper on "Updated version of the General Housing Policies" circulated vide PLC Paper No. CB(1) 1066.

IV Review of Tenants Purchase Scheme

Meeting with the Hong Kong Youth Concern Group on Housing Policy (HKYCGHP)
(PLC Paper No. CB(1) 1102(01))

5. At the invitation of the Chairman, Mr WONG Lee-man highlighted the salient points in the submission.

6. On the eligibility of TPS buyers, a member sought clarification on the rationale behind HKYCGHP's suggestions of allowing better-off tenants to buy TPS flats on the one hand while opposing the sale of TPS flats to well-off tenants on the other. Mr Bill LAY explained that their suggestions had taken into account the different financial situations between better-off and well-off tenants. Under the existing housing subsidy policy, better-off tenants referred to those with a household income exceeding twice the corresponding Waiting List Income Limit (WLIL), whereas well-off tenants were those with a household income and net asset value exceeding three and 104 times WLIL respectively. Given the low income threshold for better-off tenants, they would easily fall outside such a category when there was a drop in their household income, in particular during economic downturn. It was therefore reasonable to include better-off tenants under TPS. However, in view of the sound financial situation of well-off tenants, they should be encouraged to buy flats under subsidized home ownership schemes instead of TPS flats. This was also consistent with the principle of safeguarding rational allocation of public housing resources to families in genuine need of subsidy.

7. Some members enquired if the proposed differentiation between better-off and well-off tenants in the sale of TPS flats had been referred to the Administration for consideration. Mr LAY responded that HKYCGHP had reflected its views to the Housing Department but was not able to meet with the Housing Bureau (HB) before the implementation of TPS. He nevertheless welcomed an opportunity to discuss the proposals in detail with HB. In response to the Chairman, the Deputy Secretary for Housing (DS for H) advised that although HB had not met with the deputation, it had received numerous views from members of the public since the announcement of TPS in January 1998. Some of these were similar to the proposals put forward by HKYCGHP. After careful consideration, the Administration concluded that in making a significant contribution towards achieving the 70% home ownership target, the objective of TPS was to sell public rental housing (PRH) flats as soon as possible to sitting tenants. As there was no existing policy to remove well-off tenants from PRH, the Housing Authority (HA) would have to continue renting out public housing flats to these tenants if they were not allowed to buy their own flats under TPS.

8. On members' suggestion of setting different sale prices of TPS flats for different groups of tenants as was the case with the existing rent policy, DS for H considered it not feasible because unlike domestic rents which were exclusively determined by HA, the Administration had to take into account the assessed market value provided by the Rating and Valuation Department in determining the sale prices of TPS. Furthermore, a non-standardized pricing strategy might give rise to legal challenges. Mr WONG Siu-yee agreed that a standard sale price should apply to all sitting tenants regardless of their status while other members were not convinced of the Administration's response as it was not uncommon for the Housing Society to sell subsidized home ownership flats to its tenants at a more preferential discount rate.

9. On the selection of TPS estates, Mr LAY urged the Administration to announce as soon as possible the names of all TPS estates and the relevant sale schedule to avoid future confusion. Furthermore, the Administration should spell out clearly the responsibility between TPS owners and HA in the event of redevelopment of TPS estates. In response to the Chairman, the Deputy Director (Works) (DD/W) considered it not feasible to announce the names of all TPS estates in one go having regard to the complexity of the procedures involved. These included the need to check the physical conditions of selected TPS estates and to undertake essential renovation works before these were put up for sale. Nevertheless, the Home Ownership Committee of HA would announce the PRH estates to be included under TPS over the next few years shortly. DD/W assured members that conditions for redevelopment would be mandated in the Deed of Mutual Covenant for each TPS estate.

Meeting with the Action Committee on the Rights of Prospective Owners of Home Ownership Scheme (HOS) Flats
(PLC Paper No. CB(1) 1102 (02))

10. The deputation remarked that the Action Committee comprised prospective owners of HOS Phases 18, 19A and 19B. They regretted that the high mortgage interest rate brought about by the recent financial turmoil had hampered the repaying ability of owners concerned. To alleviate their financial hardship, the deputation urged HA to consider:

  1. allowing HOS Phases 18, 19A and 19B owners to enjoy the same flexible discount rates offered to Phase 19C; and

  2. refunding HOS deposits upon rescission to all Green Form buyers who had acquired HOS flats prior to the introduction of TPS, while retaining their rights to remain in PRH and to purchase future HOS flats.

The deputation added that they were willing to accept the additional administrative cost incurred as a result of these changes.

Meeting with the Concern Group on the Rights of Prospective Owners of Home Ownership Scheme Flats
(PLC Paper No. CB(1) 1102(03))

11. As the sale of PRH flats had undermined the HOS secondary market, the deputation considered that HA should refund HOS deposits to all HOS buyers upon rescission. They also urged the Administration to apply the same flexible discount rates offered to Phase 19C to other HOS buyers who had not yet completed the assignments for HOS flats.

Meeting with Kwai Chung Residents Association

12. The deputation expressed grave concern about the confusion brought about by the recent changes in housing policy and urged the Administration to conduct a comprehensive review on the existing housing policy. The deputation also considered that the new flexible discount rates were beneficial to purchasers and should be extended to cover HOS Phases 18, 19A and 19B owners for the sake of equity.

Meeting with the Administration
(PLC Paper No. CB(1) 1073 and 1102(06))

13. Before commencing discussion, DS for H clarified that the decline in the HOS secondary market was a result of the recent financial crisis rather than the launching of TPS. He added that TPS was one of the vehicles to achieve the housing target of home ownership rate of 70% by the year 2007. Details of other initiatives such as the option to buy or rent a PRH flat, was being drawn up and a finalized package would be submitted to HB shortly. To ascertain the effectiveness of TPS, the Administration had conducted a review of the Scheme and the relevant report would be made available for the Home Ownership Committee of HA in May 1998.

14. Members considered that apart from tenants of TPS Phase I estates, the Administration should also refund HOS deposits to other Green Form buyers since the selection of estates under TPS Phase I was only an administrative decision. Other estates would be included under TPS sooner or later. Hence their status was no different from TPS Phase I tenants and they should be treated on equal terms regarding the refund. DD/W explained that the refund of HOS deposits was an exceptional arrangement to take account of the fact that tenants concerned were not aware of the alternative of buying their own PRH flats when they purchased HOS flats. As such, the refund should only apply to tenants of TPS Phase I estates. He emphasized that only tenants who had not yet completed the assignments for HOS flats would be eligible for the refund, and that these tenants were required to sign an undertaking to ensure that they would buy their PRH flats upon rescission.

15. On the suggestion of allowing HOS Phases 18, 19A and 19B owners to enjoy the same flexible discount rates under Phase 19C, DD/W advised that this had been discarded by the Home Ownership Committee of HA on the ground that owners concerned had already completed the Agreement for Sale and Purchase for HOS flats. It was therefore not appropriate for HA to change the terms and conditions in these Agreements. Members were not convinced of the Administration's explanations as the refund of HOS deposits to TPS Phase I tenants was already a violation of agreement terms. Given the intention of the flexible discount rates to alleviate the financial hardship of HOS buyers, this should be extended to cover HOS Phases 18, 19A and 19B owners who had been affected immediately by the high mortgage interest rate brought about by the recent economic turmoil. Furthermore, the difference in sale prices would be reflected in the premium upon resale. A member remarked that a change in terms and conditions would not be considered as a violation with the consent of the contracting parties. For example, the waiving of the three-month notice period for termination of rental tenancies of commercial premises in HA-managed shopping centres. DD/W clarified that the introduction of the flexible discount rates was to take account of the wide public acceptance of the TPS model for flexibility in the initial payment, and it was not because of the economic downturn. He nevertheless undertook to relay members' concern to HA for consideration. Admin

16. Members remained unconvinced of the Administration's explanation. As a consolidated view of the Panel, the Chairman moved and members passed the following motion:

"That this Panel urges the Housing Authority to allow flat-buyers under the Home Ownership Scheme (HOS) and Private Sector Participation Scheme who have not yet executed the assignments to enjoy the same flexible discount rates which are offered to Phase 19C HOS flat-buyers and to review the arrangement on deposits from those buyers who rescind their purchases."

(Post-meeting note: A letter to the Administration on the motion was issued on 13 March 1998.)

V Matters arising

On Ning Garden

17. Owing to time constraints, members agreed to defer discussion of the item to the meeting on Monday, 30 March 1998.

VI Any other business

18. There being no other business, the meeting ended at 10:45 am.

Provisional Legislative Council Secretariat
17 June 1998